Macro Roundup (Jan 26)

SHANGHAI, Jan 26 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar edged higher against a basket of currencies on Monday, as a burst of volatility in stock markets around the globe sapped investors' appetite for riskier currencies.

Concerns over the timing and size of additional U.S. fiscal stimulus sent major U.S. stock indexes briefly more than 1% lower before they recovered to trade little changed on the day.

The sharp move in stock markets soured FX traders' appetite for risk, Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said.

“Your high beta currencies - currencies that are highly correlated with equity markets and global risk appetites - are tumbling in synchrony with equity indexes,” Schamotta said.

Market sentiment turned more cautious at the end of last week as European economic data showed that lockdown restrictions to limit the spread of the coronavirus hurt business activity.

On Wall Street, US stock futures were little changed Monday evening as Wall Street geared up for the heart of corporate earnings seasons.

Futures contracts tied to the Dow Jones Industrial Average slipped 22 points, or less than 0.1%. Those for the S&P 500 and the Nasdaq 100 dipped 0.1% and 0.2%, respectively.

The move in futures follows a volatile day in Wall Street which saw the S&P 500 rise 0.4% to a new record high after being down more than 1% earlier in the session. The Nasdaq Composite also set a new record at 0.7%, while the Dow Jones Industrial Average slipped 37 points, or 0.1%.

Monday's session was marked by wild swings in heavily shorted stocks, including GameStop and AMC Entertainment, as retail investors bet against short-selling hedge funds, fueling US stock futures on Monday evening as Wall Street geared up for the heart of corporate earnings seasons worry about stocks becoming detached from their fundamentals.

Oil prices edged higher on Monday as optimism around U.S. stimulus plans and some supply concerns boosted futures, but demand worries prompted by coronavirus lockdowns limited gains.

Brent crude futures rose 31 cents to $55.72 a barrel. U.S. West Texas Intermediate crude settled 50 cents, or 0.96%, higher at $52.77 per barrel.

Officials in U.S. President Joe Biden's administration on a Sunday call with Republican and Democratic lawmakers tried to head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive.

“In the US, newly inaugurated President Biden seems to be pushing for a quick approval of his proposed $1.9 trillion pandemic relief package, a development interpreted by the market as a clear indication that the new U.S. administration aims to kick-start an economic recovery, which will naturally benefit fuel consumption,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.

Gold prices pared gains on Monday as the dollar edged higher, but expectations of fresh U.S. fiscal stimulus underpinned the bullion ahead of this week's Federal Reserve's meeting.

Spot gold was up 0.1% at $1,854.81, after rising as much as 0.8%. US gold futures settled 0.1% lower to $1,855.20 per ounce.

The dollar was up 0.2%, making bullion more expensive for holders of other currencies.

“We're starting to get early indications that the dollar index has hit a near-term bottom. If that's the case, a rising dollar would work against the precious market bulls,” said Kitco Metals senior analyst Jim Wyckoff.

“The prospect of inflation down the road given all the stimulus and central bank easing that has made the world financial system awash in cash, that's supportive (for gold) on a longer term basis.”

On the data front, Germany's IFO business climate index fell in January, with Monday's reading coming in at 90.1, down from 92.1 in December as both current conditions and expectations fell.

US FHFA House Price Index for November and Conference Board Consumer Confidence Index for January will be released today.